Biochemical and genetic analyses of Rho protein of E. coli revealed the following mechanism of transcription termination mediated by Rho: 1. The dissociation of ribosomes at the nonsense codon located at the end of a cistron triggers Rho-mediated transcription termination. 2. Hexameric Rho binds to the nascent RNA.RNA polymerase.DNA complex at the termination site and interacts with the RNA polymerase to displace it from the 3'-end of the RNA, 3. The resulting hexameric Rho.RNA complex, as a result of ATP hydrolysis, dissociates into free RNA and monomeric Rho. 4. Monomers of Rho undergo ATP-dependent assembly and the newly formed hexameric Rho then participates in a second termination event. This model of Rho-mediated termination, supported by the experiments described here, outlines catalytic action of Rho for the first time.